House Panel Lends An Ear To Internet Access

April 26, 2001|By JONATHAN COX Bloomberg News

WASHINGTON — Congress began debating a bill Wednesday to lift U.S. limits on regional phone carriers such as BellSouth Corp. and help them deploy fast Internet connections, amid complaints by rivals that the measure spells financial ruin.

Some lawmakers at a House Energy and Commerce Committee hearing said Congress must adopt the measure or rural areas, which often lack fast Web connections, would fall behind the rest of the nation. Others argued that giving the big local phone companies relief would kill rivals such as Covad Communications Group Inc. that have invested billions in phone networks.

"While broadband deployment has begun to speed up in urban and densely populated suburban areas, broadband deployment is almost nonexistent in rural areas," said committee Chairman Billy Tauzin, a Louisiana Republican and co-sponsor of the bill.

"To give carriers a greater economic incentive to deploy broadband services more rapidly everywhere in the United States, Congress needs to complete the deregulation begun" by a sweeping telecommunications reform law in 1996, he said.

The measure is a lobbying priority for the regional carriers this year. The law passed in 1996 requires the former local monopolies to lease pieces of their networks to rivals to spark local phone competition.

The companies say Congress never intended that the rules be applied to the fast Internet connections. The carriers lack an incentive to install advanced equipment because, when they do, rivals may demand access to the bigger pipes and erode the return on investment, they say.

Cable companies such as AT&T Corp. are exempt from the obligations and have been able to gain control of 70 percent of the fast Internet access market, BellSouth, SBC, Verizon and Qwest say.

"Policy-makers must stop applying old regulatory models to this entirely new, competitive technology," Thomas Tauke, senior vice president of public policy for Verizon, said in written testimony.

Advocates for rivals of the large phone carriers disagree.

The bill "shields the Bell companies while emptying a six-shooter into the heart of new economy companies," said Rep. Edward Markey, D.-Mass. "It's a competition killer."

Smaller rivals say the bill would remove incentives for regional carriers to open their networks. It is a "sham" to help the regional carriers escape requirements of the law, said Rep. Charles Pickering, R.-Miss.

"It's a poison pill for the technology economy," said Covad Chairman Charles McMinn.

The regional carriers are confident the House will pass the measure. The Senate could become a tougher battlefield.

Four senators yesterday wrote to Federal Communications Commission Chairman Michael Powell urging him to ensure the regional carriers meet their legal obligations. Only then, they wrote, should the big companies be deregulated.